Hoffman v. City of Syracuse

• Decision Date: 08 March 1957
• Citation: 2 N.Y.2d 484,141 N.E.2d 605,161 N.Y.S.2d 111
• Parties: , 141 N.E.2d 605 Elmer H. HOFFMAN et al., Appellants, v. CITY OF SYRACUSE et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 111

161 N.Y.S.2d 111

2 N.Y.2d 484, 141 N.E.2d 605

Elmer H. HOFFMAN et al., Appellants, v. CITY OF SYRACUSE et al., Respondents.

Court of Appeals of New York.

March 8, 1957.

Morris Garber, Syracuse, for appellants.

George T. Driscoll, Corp. Counsel, Syracuse (Arthur M. Beach, Syracuse, of counsel), for respondents.

FULD, Judge.

A retail liquor store operator and an association of liquor dealers seek a declaratory judgment that the City of Syracuse Sales Tax Law does not cover the sale of alcoholic beverages for off-premises consumption or, at least, if that be decided against them, that the sales tax on such beverages be computed on the retail price of the bottled liquor, less the federal and state excise taxes included in such price.

The court at Special Term decided that the city was justified, not only in imposing a sales tax on alcoholic beverages, but also in having the tax computed on the over-all sales price including the amount of excise taxes that went to make up such price. Concluding that there was no basis for the declaration sought by plaintiffs, the court granted defendants' motion, dismissing the complaint. The Appellate Division agreed with Special Term's reasoning and views, but reversed the judgment upon the ground that defendants were entitled to a declaration upon the merits. Since the material allegations of the complaint are necessarily admitted, no questions of fact are presented and the Appellate Division was quite right in ruling that a judgment declaring the rights of the parties should be made. See, e. g., Rockland Power & Light Co. v. City of New York, 289 N.Y. 45, 43 N.E.2d 803; German Masonic Temple Ass'n of City of New York v. City of New York, 279 N.Y. 452, 457, 18 N.E.2d 657.

In 1947, the state passed legislation authorizing cities such as Syracuse to adopt a sales tax law, L.1947, ch. 278, McK.Unconsol.Laws, § 10001 et seq., and, four years later, that city's common council enacted Local Law No. 5 of 1951, effective January 1, 1952, imposing a 2% retail sales tax. Since that date, the tax has been assessed on sales of alcoholic beverages for off-premises consumption, to which no one objected, and federal and state excise taxes, imposed (according to the complaint) by sections 5001 through 5005 of title 26 of the United States Code and sections 420 through 438 of this state's Tax Law, Consol.Laws, c. 60, were excluded from the computation in accordance with a regulation of the city's commissioner of finance and further explicit notification from him. This method of computing the tax continued with the commissioner's approval, indeed, at his direction and instance, until 1955; in June and September of that year, he issued a directive, in the form of a letter, advising plaintiff Hoffman and (again according to the complaint) 'others similarly engaged' in the retail liquor business that, on and after October 1, 1955, the computation was to be made on the total sales receipts, that is, the over-all sales price, including the excise taxes.

That advice sparked this action.

As to plaintiffs' first point that the retail sale of alcoholic beverages for off-premises consumption is not subject to the sales tax there is little need to add to what the court at Special Term said. We have no doubt that the statute covers the sale of such beverages, for in the plainest of terms section 2 of the local law, following closely the provision of the state statute, imposes the tax upon 'every retail sale * * * of tangible personal property,' excepting only the articles particularly specified in a schedule designated 'A,' and alcoholic beverages are not specified. In other words, the absence of that item among those listed for exemption is decisive. 'Food and food products' are excepted and, while the legislature could have defined those terms in such a way as to include all articles of food and drink, including hard liquor (see, e. g., Agriculture and Markets Law, Consol.Laws, c. 69, § 2, subd. 3; § 198, subd. 1), it is clear that in their present context they do not encompass gin or whiskey or other alcoholic beverages. ¹

Having concluded that alcoholic beverages are subject to the sales tax, we turn to plaintiffs' second point that the state and federal excise taxes be excluded from sales receipts in computing the sales tax.

The state enabling act, L.1947, ch. 278, § 7, requires the State Tax Commission to prepare model local laws and regulations, for the assistance of local officials, in order to effectuate uniform administration of local sales tax laws. The model law, prepared by the commission (3 Prentice-Hall, New York Tax Service, par. 70,100 et seq.), is substantially the same as that adopted by the City of Syracuse. In both the suggested model law and the enacted local law, the term, 'Receipts' from retail sales, upon which the 2% sales tax is to be computed, is defined as (Local Laws, 1951, No. 5 of City of Syracuse, § 1, subd. (d); Model Law, 3 Prentice-Hall, ibid.):

'The amount of the sale price of any tangible personal property sold at retail * * * without any deduction therefrom on account of the cost of the property sold * * * or any other expense of the vendor.'

Among the regulations promulgated by the commissioner of finance, effective as of January 1, 1952, was regulation 29, providing in essence that, in computing the sales tax, the amount of certain federal and state excise taxes should be excluded in arriving at the amount of taxable receipts from a retail sale. Regulation 29 is identical with a model regulation prepared by the state tax commission (3 Prentice-Hall, op. cit., par. 69,562), except that the commissioner of finance added the second paragraph:

'Reg. 29. Federal and State Taxes. Vendors of tangible personal property upon which there are imposed certain federal excise taxes or the State tax on gasoline and similar motor fuel are not required to include the amount of such taxes in the receipts from the sale of tangible personal property when computing the tax imposed by the Local Law, providing, however, that such taxes shall be separately stated and billed in addition to the purchase price of the tangible personal property.

'Where a Federal Excise Tax is included in the selling price the tax is to be computed on the amount of the sale less the amount of the excise tax, provided, however, the vendor keep a record of such transaction.'

And, the complaint alleges, on or about January 1, 1952, simultaneously with the adoption of this regulation, the commissioner of finance 'authorized and directed' retail liquor dealers in Syracuse to compute the sales tax on the sale of alcoholic beverages for off-premises consumption on the basis of the retail price less the federal and state excise taxes included therein. In addition, it is asserted, the commissioner 'required that the amount of such excise taxes should be ascertained from the schedule marked Exhibit 'A' hereto attached * * * (and that) the said chart (i. e., schedule) was required to be displayed on the vendors' premises.' The chart, thus authorized for use by the vendors, and for display in their stores, computed the sales tax without taking into account the excise taxes.

These directions of the commissioner remained in force until 1955; as noted above, in June and September of that year, the commissioner sent letters to the liquor dealers which, in effect, countermanded the earlier directives and instructed that, from on and after October 1, 1955, the sales tax was to be computed on the full selling price, inclusive of the federal and state taxes.

This latter construction is unquestionably the correct one. The liquor excise taxes here involved are taxes imposed upon the manufacturer, the distiller, the imported, U.S.Code, tit. 26, §§ 5001-5005, or the distributor, Tax Law, §§ 420-434, and clearly fall within the coverage of the term 'Receipts' from retail sales, upon which the sales tax must be figured. There can be no question that such taxes constitute a part of the cost of the property sold, just as much...